Merck & Co.
MRK, -0.25%
said its third-quarter profit soared from a year-earlier period that was weighed down by a legal charge, while revenue rose 8% on higher sales of diabetes drugs and the Gardasil cervical-cancer vaccine.

The Whitehouse Station, N.J., drug maker also raised the lower end of its forecast range for full-year 2011 earnings, and said it would slightly reduce planned research-and-development spending for 2011.

It was a relatively strong financial performance in a challenging year for Merck, as it has experienced certain setbacks in its drug-development efforts and announced layoff plans for thousands of employees to cut costs ahead of expected patent expirations for top-selling drugs.

"Overall, we remain encouraged by Merck's strong in-market product growth trends and ongoing cost-cutting initiatives, which bode well for [earnings] growth post the Singulair patent expiration," J.P. Morgan analyst Chris Schott wrote in a research note.

Chief Executive Kenneth Frazier said on a conference call with analysts the company was actively looking at licensing and partnership opportunities to bolster its product pipeline.

For the third quarter, Merck said net income rose to $1.69 billion, or 55 cents a share, from $342 million, of 11 cents a share, a year earlier.

The latest quarter included costs associated with acquisitions and employee layoffs. The year-earlier quarter included a $950 million charge to cover an impending settlement of a government investigation of Merck's marketing and research practices surrounding its former painkiller Vioxx.

Excluding certain items in both periods, earnings rose to 94 cents a share from 85 cents a share a year earlier, topping the 91-cent-per-share mean estimate of analysts surveyed by Thomson Reuters.

Combined sales of diabetes drugs Januvia and Janumet jumped 41% to $1.2 billion for the third quarter.

Gardasil, which protects against the cancer-causing human papillomavirus, or HPV, posted sales of $445 million, up 41% from a year earlier. It was an unusually strong gain for the product compared with recent years when sales were under pressure.

Merck attributed the Gardasil gain to increased vaccination of both females and males, and wholesaler purchases in conjunction with the product's launch in Japan. Earlier this week, an advisory committee of the U.S. Centers for Disease Control recommended boys routinely get vaccinated against HPV.

Merck's biggest product, the asthma and allergy medication Singulair, had sales of $1.34 billion, up 10%. Merck is expected to lose U.S. patent protection for Singulair in August 2012.

Sales gains were also registered for the Zetia cholesterol drug and the Isentress HIV medication.

Merck reported $31 million in third-quarter sales of its new hepatitis C drug Victrelis. In comparison, Vertex Pharmaceuticals Inc.
VRTX, +0.02%
on Thursday reported $420 million in sales of a rival new drug, Incivek.

Animal-health sales rose 20%.

For the full year, the company now sees earnings of $3.72 to $3.76 a share, excluding certain items, and revenue growth in the mid-single-digit range, up from its prior guidance of $3.68 to $3.76 and revenue growth in the low- to mid-single-digit range.

Merck lowered its forecast of adjusted R&D spending for 2011, excluding certain items, to a range of $7.8 billion to $8 billion, from a prior range of $8 billion to $8.3 billion.

Shares were up 2.6% at $35.20 in premarket trading. The stock is down 4.8% since the start of the year.

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